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How To Identify, Manage And Prevent Inventory Obsolescence

How To Identify, Manage And Prevent Inventory Obsolescence

One of the greatest challenges in managing inventory is that there is a time lag between the purchase of supply in bulk and the time when it is sold and shipped. During this lag, a lot can happen – including changes in technology, trends, and consumer behavior. Sometimes these changes mean that ordered items are unlikely to sell, so instead it languishes on warehouse shelves. In this article, we’ll look at inventory obsolescence, and what you can do about it.

What is Inventory Obsolescence and Why Is It A Problem?

When a product is obsolete, it has reached the end of its life cycle. That could mean it is a food or medical item that has expired, a piece of clothing that is no longer trendy, or an electronic device that has been eclipsed by a newer version. The inventory is a problem for 2 reasons.

  1. The decreased value of the supply means it is highly likely to get written off, rather than sold.
  2. The items that aren’t tracked continue to cost more especially to the warehouse.

How to Identify Obsolete Inventory

If a product is sitting on warehouse shelves for a long time without selling, there is a high likelihood that it is outdated. Tracking orders and inventory dynamically and setting up warning systems is the best way to identify those products, although regular audits are a close second best. 

How to Manage Obsolete Inventory

The best time to manage your inventory is when you have identified a product that is selling slowly, or slowing down but has not become completely unusable. You can run a sale to get rid of this inventory at a discount or bundle the problematic products with some more popular ones to stimulate sales. You can also re-examine your marketing efforts to see if there is a better way to sell this product to a different demographic.

By the time you have identified obsolete inventory, you’re unlikely to get the full price for these items, and your best option is likely to write them off as a loss and donate the items to a charity or give them away for free. At least that way, you are no longer responsible for the cost of storing them.

How to Prevent Inventory from Becoming Obsolete

The best way to avoid the problem in the first place is to track your inventory dynamically so you can respond strategically when product sales begin to drop off. Poor inventory tracking is the most common reason for inventory obsolescence and the only reason why the products remain on warehouse shelves for weeks or months without selling.

Contact B&C Logistics

If you need help fulfilling orders and getting your products into the hands of your customers, reach out to B&C logistics. We have a fulfillment center that can meet all of your business needs without the headache of managing everything yourself.